A time capsule of the greatest financial mania in the history of mankind, told in real-time by regular folks and patriots. May future generations better understand the madness of crowds, and how power and money corrupt.

No votes by congress. No dissent. Just a junking of free trade and capitalism, by Bush Administration decree. And the mother of all stock rallies, right before the election.

"So this is how democracy ends, with applause?"

SEC bans short-selling

WASHINGTON - The Securities and Exchange Commission took the dramatic step early Friday of temporarily banning the routine practice of betting against company stocks.

The move, announced on the agency's Web site, may well be unprecedented and a reflection of regulators' concern about the widening scope of the financial crisis as entreaties come from all quarters to stem a swarm of short-selling.

In the announcement, the commission said it was acting in concert with the U.K. Financial Services Authority in taking emergency action to "prohibit short selling in financial companies" to protect the integrity of the securities market and boost investor confidence.

"The commission is committed to using every weapon in its arsenal to combat market manipulation that threatens investors and capital markets," SEC chairman Christopher Cox said in a statement. "The emergency order temporarily banning short-selling of financial stocks will restore equilibrium to markets."

The move, he said, would not be necessary in a well-functioning market and is only a temporary step that is part of the actions being taken by the Federal Reserve, the Treasury and Congress.

By the end of today stocks will be higher than they were at the start of the week. Down 500 monday, up 150 tuesday, down 400 wed, up 450 thurs, about 350-500 today.

When it's all said and done all this hyseria will have been about nothing.

You people act as if you've never seen wild swings in stocks before. Anyone hear of 1987? 1997? 2001/2002?

I mean holy shit folks, get a grip. This kind of thing happenes every now and then. People freak out, think the end is here and month later forget all about it.

Unfortunately because the media - and this includes you HP - acts like Armageddon is near, idiot politicians react and come up with some bullshit feel good legislation that does nothing but set the stage for the next crisis in 10 years.

I told you HP'ers that in the end, there will be a massive government bailout. Now that the government has bought out the junk mortgages from banks, now the next step is to "rework" or "refinance" the mortgages of homeowners who are behind their payments! LOL, LOL, LOL. I TOLD YOU SO.

So in essence, people like me who bought a house I could not afford, took out a HELOC loans to live a fantastic lifestyle and who is now behind my mortgage payments will be helped.

While HP'ers who were driving a 1987 Honda, lived below their means, didn't go into debt, etc... will be left holding the bag.

You HP'ers called people like me Fucked Borrowers, you laughed at me, you made fun of me, you looked down on me, you called me stupid, dumb, dumb ass, etc...

Keith, I really used to like your website, very good commentary. But the republican bashing is just out of control. 9 of the top 10 richest people in government are democrat. Do you really believe any of this is a party's fault? If its any party its the democrats.Fannie freddie - democrat invention

All of the laws that were passed for affordable housing - Democrat(clinton to be exact, I belive 1996)

Seriously, wake up. Democrats are at least half responsible, and probably alot more. After all, they want socialism. Isn't that where were heading?

Man skf is cliff diving.would have been nice to pick up citi at 13 yesterday.I don't have a crystal ball.Some people made some seriuos money and then some lost some serious money.The govt screwed me for sure.I did get short crude via dug last night but not looking too good for me today.Time to get a little jack and watch this open.

I like your blog, I read it often, but please you can not blame everything on the Bush administration, while todays news is unfortunate it is both parties that we have to blame not just the republicans. People need to realize that the difference between republicans and democrats is very slight. This illustrates my point exactly http://tinyurl.com/4xff96

The very wealthy are taking steps now to assure that they can make an orderly retreat and protect as much of their profit as possible... same as it ever was dude. Cash is going to be king for the "little people" if they are smart and not greedy. The money has "in God we trust" on it for a reason folks... that means have faith in the way the God made man - at the end of the day, the money represents his labor and smarts in a form that is a medium of exchange. If you are bit of a gambler, you can go with gold or silver. Just remember that in the past, governments have outlawed the holding of gold by individuals and there is nothing that says they won't do it again. Nothing like emminent domain over your goodies, huh? Got gold? You might want to consider storing it somewhere outside the U.S. Just as they outlawed some short selling, they could do the same for gold ownership so learn from the past. My advice would be to keep your debts to a bare minimum, save what you can, be happy with simple things and stay educated. You can't educate the thundering herd but you can make sure you don't get trampled under them if you use your head.

The way the system of stocks, bonds, central banks and fiat currencies is set up is designed to crash periodically. It's purpose is to simply transfer more and more wealth into the hands of fewer and fewer.I mean, it's obvious. Failed firms (Lehman, Bear) get picked apart for cheap, those buying the chunks make out like bandits.The gov't bails out firms (Fannie, AIG, Freddie), the taxpayers now become responsible for the mess; not those who made it.The Steps the government is taking are not to just avoid a financial "crisis" like the Great Depression. The steps are to make a crisis different enough in order to hoodwink the public.

In a recent thread Keith said the ponzi scheme was over. But, it's always the last folks in the scheme who lose. In this particular US version of the game, the last people in are the taxpayers. Our money is being stolen to keep the game alive...just long enough for the scammers to cash out and leave town. That would be on or about November 4, 2008.

"The commission is committed to using every weapon in its arsenal to combat market manipulation that threatens investors and capital markets,"

WTF????? Where was the commission when speculators manipulated the housing and commodities (not to mention dotcom) markets??? This is absolute BS and has just rewarded those who took on excessive risk, while punishing US (yes, us) who stayed out of it based on fundamentals. B..S..

"anyone caught illegaly trading stocks will be caught and PERSECUTED" GEORGE BUSH...nope, yuh can't make this sh*t up....swear tuh gawd i just heard him say this on live speech at 7:50 pdt 9-19-08....busted up laffin my a** off...gawd help us....we are lookin at the butt-crack of doom here...

I like your idea about holding gold outside the US. But please tell us how to do this? As far as I know, and I may be wrong, it is illegal to take gold, over some small quantity, on a plane to, say, Europe. In fact, I can remember seeing signs in the airport about the fines and penalties for transporting gold.

Hey there HPers. Remember back about a year or so you were all up in arms about the rate freeze on ARMs? Compared to this, that was change found under the sofa cushions.

Keith asked many times when the "buy" signal will be. If this isn't a buy signal I don;t know what is. I'm going house shopping this weekend and will buy up as much as I can. One to live in and several more as investment properties. It is clear that the feds will prop up housing at all costs. And one thing I have learned is never try to fight the government, you always lose.

So you can continue renting and complain about moral hazard. Or you can profit from the government's largesse. Your choice folks.

The truly hilarious part about this whole process is that for decades the average American has been systematically propogandized into believing the laissez faire crap put out by the Chicago School of Economics. Markets were supposed to be infallible, and all government intervention is automatically wrong. Now we have a national Administration who bills themselves as Conservatives, with a capital "c", who in response to a crisis in the credit markets have gone beyond the emergency measures taken by Franklin Delano Roosevelt's first months in office. Outside of a few honest and truly conservative Republicans such as Ron Paul, and some liberal Democrats who see the danger in privatizing profits and socializing losses, I expect the measures already taken and those proposed in terms of buying up all the bad housing debt and the derivatives, will sail through the Congress and be signed into law by Mr. Conservative himself, George W. Bush.

The teetering tower of rotten wood is being propped up with Uncle Ben's Bondo. Trouble is that WE are paying for the Bondo which in the end, it a band-aid that actually exacerbates the problem in the long run.

But it buys time for Bush to exit a "winner" and allows the oinkers to position themselves into saftey.

Truly a tale of two financial systems:

1) Small businesses - subject to the "survival of the fittest" laws of free market capitalism. You mess up...you end up on the street.

2) Big Boy Bankers/Wall Street firms - no matter how bad you mess up the laws of free market capitalism are suspended and you are guaranteed your business will not fail, your huge salaries will not be garnished, as taxpayers will pay for all your failings. OINK!!!

Paulson and Benanke broke the law and violated their oaths. Now they're looking to Congress for laws to cover their crimes, and to taxpayers for a bailout of their NY buddies. Oh and BTW, the U.S. government fell of Friday, September 19, 2008 without a shot being fired.

Mish mentioned today that Schiff's fund is down about 32% on the year.

Schiff may have been right about certain things, but I don't think he's the right guy to listen to if you want to profit from this mess. He failed big time in predicting that foreign markets would do well while USA suffered. Foreign markets did even worse. Not to mention that gold has been entirely unpredictable. Anyone putting a huge chunk of their money is gold better be ready for a roller coaster ride.

I am sickened at the prospects of a trillion dollar tax payer bailout. Keith, since you're very good with the pen, can you post a form letter that we can send to our legislators...wait nevermind...that assumes it will make a difference.

BETHESDA, Md.--(BUSINESS WIRE)--Due to the emergency action announced by the Securities and Exchange Commission on September 18, 2008, temporarily prohibiting short sales of shares of certain financial companies, Short Financials ProShares (SEF) and UltraShort Financials ProShares (SKF) are not expected to accept orders from Authorized Participants to create shares until further notice. Unless notified otherwise, shares will be available for redemption by Authorized Participants as normal. The shares of these ProShares are expected to trade in the financial markets today, but may trade at prices that are not in line with their intraday indicative values.

The sort of ban that we saw this morning on shorting - 800 stocks - is both foolish and unprecedented.

There are many, many reasons to short a stock that have nothing to do with trying to drive a stock into the ground.

For example, if you're concerned about a preferred stock issue, you might short the underlying while being long the preferred. This gives you a 100% safe coupon - that is, dividend - while exactly balancing (or close to it) your risk.

This ability to hedge off that risk just disappeared.

Now has there been manipulative conduct and predatory shorting? Yes.

But you can't short a company and make money unless the company is overvalued in the first place. If you try it you will lose your shirt as the actual value, as discovered, will cause the price to rise instead of fall, your short sale notwithstanding.

And make no mistake about it - this crisis is not an accident. It is in fact a deliberate act - by our government.

Who enabled it?

Everyone.

Alan Greenspan, by flooding the market with money after 9/11 and the technology stock crash, for one.

Barney Frank and the rest of Congress, along with Bill Clinton, who made it public policy that everyone - from a daycare worker to a McDonalds' cook to someone on welfare - could and should own a house.

Both Clinton and Bush Administrations who intentionally looked the other way while rampant fraud ravaged Wall Street and Main Street both, including intentional blindness to outright false accounting in the form of "Level 3" assets and claims of solvency that were not and still are not true.

Now, just yesterday, we find out that The SEC made possible the expansion of leverage in the investment bank and broker/dealer community that made possible the loose lending which helped fuel the housing bubble and mess we are now in:

"The SEC allowed five firms — the three that have collapsed plus Goldman Sachs and Morgan Stanley — to more than double the leverage they were allowed to keep on their balance sheets and remove discounts that had been applied to the assets they had been required to keep to protect them from defaults.

Making matters worse, according to Mr. Pickard, who helped write the original rule in 1975 as director of the SEC's trading and markets division, is a move by the SEC this month to further erode the restraints on surviving broker-dealers by withdrawing requirements that they maintain a certain level of rating from the ratings agencies."

Yep - the SEC was not only involved but basically caused this mess.

And now that Congress is involved, we are going to get the mother and father of all debt - shoved down your throat:

"The proposal to create a massive facility to buy mortgage-backed securities could cost as much as a half-trillion dollars and would involve the purchase of both private-label and government-guaranteed mortgages, according to an administration official. "

This is nothing short of unbelievable, and that actually understates the cost, which is likely to be vastly more than stated. It always is.

Remember folks, the original estimate on the S&L bailout was that it would cost $20 billion.

The actual cost, when all was said and done, was approximately $160 billion dollars extracted from your wallets all across America.

Oh, and don't believe that $500 billion number. Its a lie. I have long maintained that we have about $2-3 trillion of bad housing-related debt involved, of which only $200-300 billion has been written off.

So there's still $1.7-2.7 trillion out there to be cleared in this mess and you are going to get charged for all of it unless you literally take to the phones and the streets right now - this weekend - and stop it.

This sort of election-year pandering is beyond outrageous; it is nothing other than government theft (from you) to bail out the pigmen of Wall Street who have robbed you blind for the last decade.

WE THE PEOPLE DO NOT HAVE THE MONEY TO SUPPORT THIS AND THIS SORT OF PANDERING AND OUTRAGEOUS CRAMDOWN OF THE COST OF WALL STREET'S MALFEASANCE UPON THE CHECKBOOK OF THE AMERICAN CONSUMER IS AN ACT OF ECONOMIC TREASON.

Too bad about schiff.As much as the US stinks, God why would you invest in China? Or Europe? They'll take your money even faster than Hank in a pinch.

In a monetary system collapse, the entire global system will crash as it flounders for a next bright idea (you know they won't just pick Gold, even though they should - look at the idiocy of these people). The great depression was world wide.

Oh and to the deflationists like Mish, Fuck you and eat shit assholes. Look at 30 year bond today. And gold.

Here's Kudlow, the perma-bull, against today's stupidity, knowing it sets up the mother of all crashes down the road:

http://www.cnbc.com/id/26791654

The decision by SEC Chairman Chris Cox to ban short selling is a terrible idea. It is an encroachment on free-market principles.

In extreme, the absence of short sellers would inflate stock market upturns, probably into bubbles. Short sellers keep the market honest. I know many in the short-selling community and most of them really do their homework. They are skeptical about puff pieces on companies and they are properly cynical about corporate press releases.

Why Cox is doing this is hard to fathom. He is supposed to be a free-market disciple of Milton Friedman and Art Laffer. It would have been much simpler and much more constructive if Cox restored the so called up-tick rule, where short sellers only can play after a share price has ticked higher. Some academic study apparently informed Cox that the up-tick rule was unnecessary. But virtually everyone who operates in the stock market disagrees.

Keith, even drug and alcohol addled Larry Kudlow occasionally gets some things right, as in his quite accurate attack on the SEC's panicy ban on short selling. But when the situation is bad enough, the free marketeers are the first to demand government intervention to save their hides. We are now all witnesses to the most massive privatization of financial losses in history as Uncle Sam steps in to bail out bad loans on overpriced real estate. And I would expect further waves of government intervention by this allegedly conservative Administration. The most interesting thing to me is just where is the money coming from? We had a national debt of close to 10 trillion dollars before the events of the last few weeks. I've seen estimates that the Federal Reserve has already exhausted its 900 billion or so in reserve. If the bailouts continue, and even accelerate, as is likely, I'm not so sure that the United States will continue to enjoy a AAA credit rating on its debt.

Yes. The technical term for this enterprise is called a Racket. Though don't expect the govt to prosecute itself under the RICO statute. I wonder if it's safer to speculate in non-financial commodity futures? LOL

Banning short selling will only prolong the decrease of the stock prices. The short selling just accelerates the process. If they allowed short selling of houses, then this crisis would be long over by now and the housing prices would be based on fundamentals.

Ok so lets see, we can just permanently ban short selling of every American stock that is out there. Then we can bail out every bank and financial institution that was ever in trouble or will be trouble with tax payer money. Then we can bail out every irresponsible homeowner who is in trouble with more tax payer money. According to the way the Fed and treasury are operating this method will make America's economy and stock market shoot to the moon and never go down. Right? Right? Oh if it were only that easy. See we are a debtor nation who COMPLETELY relys on CREDITOR nations like China, India, Russia etc. When they see how America is printing money fast as it can and irresponsibly handling financial decisions then they will stop investing in this country. They will soon realize that they are never going to be repaid trillions of dollars we owe them, and it will be best to cut their losses short by cutting America off. Our credit rating will soon drop like a rock, and then folks you will see how bad things have really gotten and how low housing prices and the economy will really go. We won't be let of the hook by going into a recession, instead it will be a depression. All those stupid homeowners who borrowed up to their eyeballs will be screaming for a bailout and it will fall on deaf ears because the government will not only be flat broke, but completely out of creditors to help.

Welcome to the People's Republic of Rich Bankerstan. You will be expected to work your entire life to subsidize the Christmas bonuses of a lucky elite. All your taxes, and your children's taxes and their children's on ad infinitum, will be dedicated to paying for lavish parties for the elite.

You will live in a country where the infrastructure crumbles because there is no money available to re-pave roads, repair bridges, install safety equipment on commuter rail lines. That money will be spent on buying expensive fur coats for the mistresses of investment bankers on Wall Street.

In a few short years, Bush and his cronies have brought back feudalism. The elite own all. The many own nothing.

Clap for the dancing monkey in the flight suit, ye Republican faithful. You bought it. Now we all have to pay for it.

Now Paulson has us all convinced that unless he gets his bail-out of bad debt ,than a grave "something" will happen .

Ok, what would of happened ? Weak firms would of been taken over by stronger firms . Really weak lending firms would of gone BK ,but most would of been insured by FDIC and other pension insurance,so who cares if a weak institution goes down . The losers would of been fools that put more in the account than the 100k max FDIC ,and the stockholders of weak firms and their stupid creditors would of loss. So what . Giant Wall Street Companies would of lost stock value and might of had to mark down their toxic waste and become lessor firms ,but they still would of survived . No doubt the thought of some big guys losing to much is a unbearable thought .The other problem is without a bail-out some of these Fat Cats might have more lawsuits filed against them for their part in the fake ponzi scheme . The government just can't allow fat cats to be subjected to Justice can they?

The other losers would of been the ones that invested in risky paper ,that was not insured . This is the risk you take in life ,so that's it. The problem is that all those investors might have grounds to sue the bad boys who created this mess ,and that would be justice ,and the rich guys would of had to pay out more . Better to let the taxpayers pay .So when these really bad greedy gamblers got sued by the investors for their fraud (voiding their fake paper) than the Big Boys would have additional Justice to pay and maybe even go to jail in the final analysis . Why should the average citizen care if this Justice would of happened ,they deserved it .

The other possible loss would of been that the government itself would of been sued,or some politicians within the government would of been busted for their catering to Big Business at the expense of the public .This might be the biggest reason why Congress and the Senate are keeping their mouths shut about the bail-outs and not protecting the interests of the taxpayers .

Other firms would of taken up the slack for the ones that failed ,so ok ,whats wrong with that ?

We would of gone into recession and the public would of discovered that jobs are needed and than the USA worker would of questioned the Wal Mart economy ,out-sourcing ,Corporations selling out America to a slave labor work force, etc for bottom line bigger Big Business profits . Production would of started going into the productive again and we might of even brought back our manufacturing based to America and started creating jobs in productive pursuits ,instead of creating houses we don't need .

This post is getting to long ,because i could just keep going ,but you get the idea . The course that was taken will F-ck the average citizen with inflation ,still no jobs or wage increases ,more taxes to pay for the bail-outs ,and a possible default on debt by USA because they took on to much ,trying to hide the crimes of the Century .

The land of the Americano is slowly decaying away like a putrid carcass of a rotten whale washing up on a crowded beach for all the world eyes to see, view, commentate on the state of the once almighty nation, the land of the Snapper Turtle.

Who can we blame on this retro-deed except ourselves ? The mentality of the current Americano is just amazing if not stupefying. Empty of feeling, obligation, morality, duty, honor, sense of self-worthiness, the only way to go for the Americano is to be roasted slowly skewered from mouth to ass on a green Chinese bamboo stick, all sizzling nicely, fat popping, juices dripping over a bed of white hot charcoal.

Such is the fate of the fat-ass Americano. What a lowdown shame for such a great nation once !

George Washington is feeling real bad right now in his tomb...

But hey, SHRUB's lovers, you got what you asked for. Satisfaction guarantee from the land of the SHRUBBY & DICKY !!!